Wednesday, September 24, 2008

Financial Solvency or Price Gouging?


It has been a difficult decade for QPR fans. In 2001 they saw their club enter administration and relegated to the third tier of English football for the first time in almost forty years. A £10million loan from the Panamanian company ABC brought the club out of administration, and in 2004 QPR won promotion to the newly named Championship. The club then suffered the tragic deaths of Kiyan Prince and Roy Jones, as well as boardroom controversy and a revolving door of managers. In 2007 it was announced that the club was paying £1million a year in interest on the ABC loan, and QPR seemed on the brink of administration. Along came Formula One tycoons Bernie Ecclestone and Flavior Briatore who purchased the club, and then sold Indian billionaire Lakshmi Mittal a stake. Instantly the club was linked with some of the biggest names in football, but unlike their neighbors Chelsea none of the transfers materialized. Instead the club announced last week that it would become the first team in the Championship to charge £50 for a ticket.
The reaction was swift from the supporters. Fans were already upset at price increase over the summer, and now they were being asked to dig deeper into their pockets. The new ticket structure meant that the top ticket at Loftus Road was more expensive than at most Premiership stadiums. With QPR’s match against Derby classified as a Category A fixture, away fans would also have to pay the increase. Derby took the matter to the Football League, and the League ruled that prices for the away fans had to remain at the previously agreed upon level. A victory for the visitors, but it appears QPR fans will have to shoulder the burden themselves.
This brings up the question of who should pay for a club’s ambitions, the owners or the fans? Billionaires like Roman Abramovich have had no problem buying the best players and operating at a loss on the path to becoming a global franchise. The new owners of Manchester City have hinted they may try to buy Ronaldo, and the number they suggested could buy a few Premiership teams. Even Arsene Wenger has questioned the motives of some owners, wondering whether football clubs are the new billionaire toy. Like Wenger suggests, many of these owners may not be in it for the long haul. When these owners become bored with their new toy, who will pay the inflated transfer fee and wages of the players? Many clubs have already taken out loans against future television revenue and gate receipts. Without the bankroll of wealthy owners they will not be able to operate at huge losses. This could mean a future of triple digit ticket prices and administration.
The owners of QPR have taken a different path. When they announced their new ticket structure, QPR’s board said “we are totally committed to building a sound financial base for the future." Their actions have proved this, paying off the ABC loan and a number of other debts on the club’s books. Instead of spending big money in the transfer market, Chairman Briatore used his connections to sign young talents Daniel Parejo, Emmanuel Ledesma and Samuel Di Carmine on loan. He also signed Lee Cook from Fulham on loan, and added experience through the free transfer of former Italian international Damiano Tommasi. The familiar name, though maybe not on the continent, of Iain Dowie was brought in to coach. Together they have helped lead QPR to fourth in the Championship, and defeated high flyers Aston Villa 1-0 in the Carling Cup. With the owners doing their part, and the players performing well, it now seems that the fans are being asked to show their support.
Whether or not the fans will show support remains a question. QPR have only drawn more than 15,000 at Loftus Road once this season. Given the current level of demand, as well as the uncertainty of the economy, it is strange that the board would choose to raise prices now. Many worry that only the prawn sandwich brigade will be able to buy the best tickets, and that the atmosphere at the ground will suffer. While £50 is a lot, the fans might think about how far the club has come. From the brink of administration, the club is now debt free and the board seems to have a good plan in place for the future. QPR has a well connected chairman, a coach who has Premiership experience, and no massive wage bills that will weigh them down for years. QPR seems to be doing right by their fans, and now they are asking their fans to do right by them. While £50 may be a lot to watch Derby, it could be a steal to watch Manchester United in the Premiership next year.